According to LETV's announcement on the evening of November 9, the company recently received the application for arbitration, which is wholly owned by Wang Sicong, the son of Wang Jianlin, chairman of Wanda Group. Based on the fact that LETV sports' breach of contract infringes upon the interests of shareholders, Beijing price asked for a ruling that LETV sports should compensate 97.8516 million yuan for economic losses.
LETV said the case was pending. According to the current situation, the matters mentioned in the three cases failed to fulfill the approval, deliberation and signing procedures stipulated in the articles of association of the listed company and relevant laws and regulations, and their legal effect is questionable. For example, each new investor in the above rounds a + and B filed an arbitration application for the listed company. According to the preliminary calculation of the listed company, the listed company, Lele interactive and Beijing Pengyi may bear a total repurchase liability of more than 11 billion yuan.
Illegal lending causes trouble
According to the announcement, in December 2016, LETV sports disclosed in a shareholders' meeting that it lent more than 4 billion yuan to its related party LETV holdings without the consent of the board of directors or the shareholders' meeting. As the funds are occupied by affiliated companies, the normal business activities of LETV sports are seriously affected. A large number of businesses are unable to carry out due to the lack of funds, or even are prosecuted and liable for failing to repay the external debts, and Beijing pus's investment rights and interests suffer losses.
Beijing Pusi and other investors have repeatedly asked LETV sports and its original shareholders to solve the problem of capital occupation, but they have never solved it and have not taken any remedial measures. According to the restructuring plan put forward by LETV sports on July 26, 2017, LETV holdings still has 2.471 billion yuan of loan principal and interest which have not been returned when they are due. At present, LETV sports has broken the capital chain and is difficult to resume normal operation, has been sued by a large number of creditors, and has been listed in the dishonest executors by many courts, and the shareholders' rights and interests of Beijing price have been seriously damaged. The breach of contract of LETV sports has seriously infringed upon the interests of the shareholders of Beijing pus. The value of the shares held by LETV sports is devalued, and the investment cost is facing a total loss. According to Article 6.1 of round B financing agreement and Article 4 of shareholder agreement, LETV sports shall compensate Beijing price for its losses.
Beijing price ruled that LETV sports should compensate 97.8516 million yuan for economic losses; LETV, Lele interactive and Beijing Pengyi should be jointly and severally liable for LETV sports's payment obligations in the first arbitration claim; the respondent should bear 400000 yuan of legal fees paid by the applicant for handling the case, as well as other expenses arising from the case.
According to the announcement, the second case is Xiamen Jiayu's request to adjudicate the principal of equity buyback payment of 42 million yuan to the respondent LETV, the minimum income calculated by 12% of the year from March 14, 2016 to the actual payment date, and other matters requested to adjudicate, with a total amount of 55.4925 million yuan. The third case is the case in which the respondent LETV and others paid the buyback price of 89.622 million yuan to Tianhong innovation to buy back all the equity of LETV sports and cultural industry development (Beijing) Co., Ltd. held by Tianhong innovation.
Or bear the repo liability of more than 11 billion yuan
For the reason of the arbitration, LETV said that LETV sports was established in March 2014, introduced investors in April 2015 and signed the "a + round shareholders agreement" and "a + round financing agreement". Seven new investors including Shanghai Yunfeng Xinchuang equity investment center (limited partnership) and Shanghai Yunfeng Xinchuang equity investment center (limited partnership) have been added, with a total investment of 579 million yuan. LETV sports reintroduced investors in April 2016 and signed round B shareholder agreement and round B financing agreement. More than 40 new investors, including Jiaxing yongwenmingti investment partnership (limited partnership) and Shenzhen Leying industrial investment fund partnership (limited partnership), increased their capital in the form of cash and debt to equity respectively, with a total investment of 7.833 billion yuan.
It is worth noting that the repurchase terms of the original shareholders (and LETV, Lele interactive, Beijing Pengyi) are set in the above agreement. The obligation promised by the original shareholder is that LETV sports fails to complete the listing work approved by the investor before December 31, 2018. The original shareholder will purchase all the company's equity held by the investor in cash and pay all the consideration according to the price agreed in the agreement within two months after the investor (and each investor separately decides) issues the written repurchase request. According to the above shareholder agreement, if LETV sports fails to complete the listing work by the end of 2018, LETV, Lele interactive and Beijing Pengyi will face the risk of paying the purchase price of LETV sports equity held by the investor.
The third quarterly report of LETV this year disclosed that according to the information available at present, the "a + round shareholders agreement" is a copy, which shows that LETV sports and the original shareholders of LETV sports, including the company, have not sealed; the "a + round financing agreement" signed and sealed by all parties involved is shown as "original", but the company has not yet been able to judge the authenticity of the "original" agreement; what the company has obtained The copies of round B shareholder agreement and round B financing agreement signed and sealed by all parties involved are the copies. The legal effect of the above contracts is in doubt. In the a + round shareholders agreement signed by the company and other shareholders of LETV sports on April 27, 2015, only Jia Yueting signed the signing page of letv.com. In addition, neither LETV sports nor the original shareholders of LETV sports, including the company, have been sealed. The company has not yet mastered the complete agreement related to round a financing.
LETV said that if all the new investors in round a + and round B filed an arbitration application for the listed company, after the preliminary calculation of the listed company, the listed company, Lele interactive and Beijing Pengyi may bear a total repurchase liability of more than 11 billion yuan, which is only the internal prediction of the company, and the final result is subject to the judgment of the arbitration committee or the court and other judicial organs.